ETF Areas to Win on Upbeat January Retail Sales
Retail sales in the United States increased 3% sequentially in January of 2023, the biggest increase since March of 2021 and way above market forecasts of a 1.8% rise. The reading showed American consumers continued to spend due to upbeat labor market and easing inflation. January gains came after a 1.1% drop in December.
Consumer spending makes up about 70% of U.S. economic activity. Thus, any gain in it will likely brighten the economic growth picture.Year-on-year, retail sales increased 6.4%.
Below we highlight a few areas and the related ETFs & stocks that may benefit handsomely.
Winning Areas
General Merchandise & Miscellaneous Store Retailers
General merchandise sales grew 3.2% sequentially in January and 4.5% year over year. Sales at department store rose 17.5% sequentially in January and up 5.4% year over year. Miscellaneous store retailers saw a 2.8% uptick in sales sequentially and 6.7% year-over-year gains. If job data remains stable, consumers may continue to splurge on activities.
Consumer Discretionary Select Sector SPDR ETF XLY thus looks to be a great pick. The underlying Consumer Discretionary Select Sector Index of the fund seeks to provide an effective representation of the consumer discretionary sector of the S&P 500 Index.
Food Services & Drinking Places
Sales of this category gained 7.2% sequentially in January and 25.2% year over year.
AdvisorShares Restaurant ETF EATZ is a pureplay restaurant ETF. This ETF is active and does not track a benchmark.
Motor Vehicle & Parts Dealers
Sales of this category gained 5.9% sequentially in January and up 2.8% year over year.
First Trust SNetwork Future Vehicles & Technology ETF CARZ follows the S-Network Electric & Future Vehicle Ecosystem Index constituents are chosen by selecting the eligible Pure-Play companies in descending order of float-adjusted market capitalization until 100 constituents have been selected.
Clothing
Apparel and accessories sales gained 2.5% sequentially in the month and 6.3% year over year. Apparel Retail takes about 20% of the fund SPDR S&P Retail ETF XRT. The fund is thus well-positioned to benefit from the trend.
Furniture Stores
Sales of this category gained 4.4% sequentially in January and has added 3.8% year over year.
Home improvement specialty retailer stocks like Home Depot HD has exposure to XLY, Vanguard Consumer Discretionary ETF VCR and VanEck Retail ETF RTH.
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The Home Depot, Inc. (HD) : Free Stock Analysis Report
SPDR S&P Retail ETF (XRT): ETF Research Reports
VanEck Retail ETF (RTH): ETF Research Reports
Consumer Discretionary Select Sector SPDR ETF (XLY): ETF Research Reports
Vanguard Consumer Discretionary ETF (VCR): ETF Research Reports
First Trust S-Network Future Vehicles & Technology ETF (CARZ): ETF Research Reports
AdvisorShares Restaurant ETF (EATZ): ETF Research Reports
